March 3, 2023 | Tesla Live Investor Event Disappoints

Tesla presented a live event for investors this week and got a mixed reaction.

Was this March 1 event a flop?

In a four-hour marathon event, various Tesla employees presented on almost every aspect of their company.

First, Musk outlined a vision for how the planet can eliminate fossil fuels entirely. He calls this The Master Plan Part 3. He shared the stage with Drew Baglino, a Senior Vice President of Tesla.

You can view the full show on YouTube https://www.youtube.com/watch?v=Hl1zEzVUV7w

The content begins about 30 minutes into the video.

Here is a brief summary of the Master Plan 3:

• 80 percent of energy comes from fossil fuels.
• Most energy in fossil fuels is wasted, in form of excess heat.
• A system based on renewable energy uses about ½ the energy that is used today.
• About 0.2% of all land is needed to provide energy from the sun.
• $10 trillion of investment is needed, or 1% of global GDP ($100T) annually for a decade.
• 30 Terawatts of renewable energy is needed.
• 240 Terawatt hours of battery storage is enough.
• There are zero insurmountable challenges.
• The storage can be achieved with batteries, both stationary and in vehicles.
• The five main areas are electricity production, electric vehicles, heat pumps, high temp heat delivery and hydrogen and sustainable fuel for planes and boats.
• 56 percent of the transition will be in electricity production and electric vehicles.

Elon Musk says that this Master Plan is more important than anything else. He mentioned that a detailed white paper with calculations and assumptions that back this view will be made available on the Tesla website.

I encourage everyone to listen to this part, as it contains some very interesting predictions and explanations.

But listeners and investors did not like the emphasis on a Master Plan to save the planet from fossil fuels. Instead, they wanted to hear more about the Next Generation car, which has been teased for several years. Many were disappointed that no specific announcement came out.

But what was presented was fascinating, including the details about improvements in manufacturing cars. This should be very encouraging to investors.

Tesla investors are hurting right now as their patience is being tested during this bear market.

Tesla shares hit a high of about $410 in mid-2022 and reached about $100 in early January. A 75 percent drawdown is hard to stomach.

Since January the shares have rallied to $190.

Tesla has market cap of $600 billion, and 2023 earnings estimates give a P/E ratio of 44. The current production expected is 2 million vehicles with $100 billion in revenues.

At 20 million vehicles in 2030 forecasted revenue could reach $1 trillion. If we assume net profits reach 15% of sales, we have $150 billion in earnings. A P/E of 20 gives a market cap of $3 trillion or five times today.

Investors are disappointed now, and the market could inflict more pain. But patience will be rewarded for shareholders of this company.

Hilliard MacBeth

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Hilliard MacBeth March 3rd, 2023

Posted In: Hilliard's Weekend Notebook

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